United Press International - Health Business - Analysis: Cashing in on healthcare trade
Cashing in on healthcare trade
By OLGA PIERCE
UPI Health Business Correspondent
WASHINGTON, March 13 (UPI) -- Surgical safaris and medical vacations are the first rumblings of a new phenomenon: global trade in healthcare services.
Medical tourism -- where U.S. patients flock to exotic locales for medical procedures ranging from liposuction to a life-saving cardiac bypass in the name of R&R and saving money -- is spreading in the face of spiraling healthcare costs.
Economists say it could improve healthcare in both developed and destination countries, while critics caution it is another form of outsourcing that could also hurt the world's poor.
The possibility of undergoing expensive surgical procedures overseas has long been known to upper-class cosmetic-surgery seekers who traveled to exotic locations to savor the sights and recover from nose jobs away from the scrutiny of their friends.
Europeans have also gone overseas for decades to avoid the long waitlists of nationalized health systems.
But now traveling for healthcare is increasingly a function of the pocketbook. Surgeries in developing countries, performed at state-of-the-art hospitals by Western-educated surgeons, are a fraction of the cost of surgery in U.S. hospitals.
"All our patients actually pay out of pocket -- that is the main reason they come to us seeking care," said Patrick Marsick of MedRetreats, one of the oldest medical travel companies in the United States, offering the services of 11 hospitals in seven countries including Argentina and Thailand.
Cosmetic surgery is still the largest share of their business, but the company offers 183 different procedures, and the number of patients who travel for serious medical procedures is increasing, Marsick told United Press International. He estimated MedRetreats will arrange medical travel for 5,200 clients next year.
Many of the patients have cancer and other life-threatening illnesses and would not be able to afford treatment in the United States, he said.
"People can mortgage their house or take out a home equity loan and afford a $10,000 surgery in another country," he said, "but not $100,000 for a surgery here.
"These people are just elated they have an option," Marsick added.
MedRetreats arranges procedures for patients, including inspecting hospitals, digitizing their medical records and providing staff to help patients navigate the foreign destinations.
The company does not charge patients directly, but turns a profit by keeping 15 percent of the 20-percent discount they demand from foreign partners.
Trade in healthcare is already having an economic impact. In 2003 more than 350,000 patients traveled to Cuba, India, Jordan and Southeast Asia to seek care. The government of India has embarked on a marketing campaign to increase health travel, and other countries in the Americas and the Caribbean are working to position themselves as premiere health-tourism destinations.
The number of foreign hospitals seeking international accreditation -- an important step in luring safety-conscious foreign patients -- is accelerating, Maureen Potter, executive director of the Joint Commission on Accreditation of Healthcare Organizations, the largest international hospital certification body, told UPI.
In order to receive accreditation, hospitals must undergo site inspections and hand over performance statistics for scrutiny.
"Accreditation is an important way for hospitals to distinguish themselves," Potter said. "Healthcare is a risky business and it does help when an organization has committed itself to external evaluation."
The commission has certified 81 hospitals since it began its international hospital accreditation program in 1999.
Freer trade in healthcare could benefit both countries involved in the exchange, Aaditya Mattoo, a World Bank economist who studies services trade, told UPI.
If one in 10 patients who needs one of 15 highly tradable, low-risk treatments went abroad, the annual savings for the United States would be $1.5 billion, according to a study Mattoo co-authored in the March/April volume of the journal Health Affairs.
The savings on an individual level could also be large. Knee replacement -- a surgery performed 400,000 times a year in the United States -- costs about $10,000 domestically but is less than $2,000 in top-notch facilities in Hungary and China. Even after adding in $1,000 in travel expenses, medical travelers still see substantial savings, according to an example in the article.
In destination countries, foreign patients mean an influx of cash, but also, and perhaps more importantly, a way to mitigate chronic brain drain among health professionals. Some of the countries most in need of doctors see a high proportion of them leave each year for better-paying jobs in better conditions in developed countries.
About one-quarter of doctors in the United States, the United Kingdom, Canada and Australia are foreign-born, and as many as 75 percent of them are from low-income countries.
More than 10 percent of India's doctors end up overseas, and nine of the 20 countries that export the most doctors are those in sub-Saharan Africa and the Caribbean -- this despite the fact that there is a chronic shortage of doctors in the developing world. In Kenya, for example, there is one doctor for every 10,000 people.
First-class, export-oriented hospitals with higher wages in developing countries could help address the problem, Mattoo said. "If you could ensure more business for people in their home countries, you would dilute the incentive to emigrate."
Although many people are already taking advantage of the healthcare trade's potential, changes in health insurance are needed for really substantial growth, he said.
Medicare and Medicaid currently explicitly forbid reimbursement for procedures performed abroad, and most private insurance plans cover emergency surgery for people who become sick while traveling but do not pay for scheduled overseas procedures.
While some conversations are taking place in the insurance industry, there has been little action so far, perhaps because insurers don't want to frighten consumers with the specter of grandpa being forced to have his coronary bypass in Thailand instead of the neighborhood hospital.
But if insurance companies did enact policies of covering the actual cost of seeking care overseas -- treatment plus travel -- there could be a large expansion in healthcare trade, Mattoo said.
"All you need to do is end the current discrimination. That would mean insurance would cover treatment regardless of where you receive it," he said. "When people have the choice, they will exercise their choice in greater numbers."
Like any expansion of free trade, however, healthcare trade would create winners and losers. Pressure from foreign competition could lower the wages of doctors in the United States.
Moreover, an influx of foreign patients has already to some extent led to a phenomenon called "crowding out," whereby prices go up for consumers in the destination country as demand for doctors there increases. For example, healthcare prices in some parts of India have already gone up for this reason, making it even harder for the poor to afford treatment.
But if proper safeguards are put in place, Mattoo said, those problems could be minimized.
Many patients will still find it necessary to seek care in their home country either because they cannot travel or because of the complexity of a particular procedure.
And of course, the health-tourism trend is a two-way street, with a parallel phenomenon already occurring to some extent: Upper-class customers from developing countries traveling to Europe and the United States for cutting-edge procedures not available elsewhere.
Mattoo noted that enlightened policies in developing countries are essential to harness the additional gains from healthcare trade to expand access to healthcare in those counties, Mattoo said.
"In some ways, healthcare is like any other good. If you start exporting more rice, the price of rice in your country goes up," Mattoo said.
"With more revenue, there's a growing possibility of cross-subsidization of care for the poor, but you have to have policies to ensure the benefits trickle down to the poor," he said.
By OLGA PIERCE
UPI Health Business Correspondent
WASHINGTON, March 13 (UPI) -- Surgical safaris and medical vacations are the first rumblings of a new phenomenon: global trade in healthcare services.
Medical tourism -- where U.S. patients flock to exotic locales for medical procedures ranging from liposuction to a life-saving cardiac bypass in the name of R&R and saving money -- is spreading in the face of spiraling healthcare costs.
Economists say it could improve healthcare in both developed and destination countries, while critics caution it is another form of outsourcing that could also hurt the world's poor.
The possibility of undergoing expensive surgical procedures overseas has long been known to upper-class cosmetic-surgery seekers who traveled to exotic locations to savor the sights and recover from nose jobs away from the scrutiny of their friends.
Europeans have also gone overseas for decades to avoid the long waitlists of nationalized health systems.
But now traveling for healthcare is increasingly a function of the pocketbook. Surgeries in developing countries, performed at state-of-the-art hospitals by Western-educated surgeons, are a fraction of the cost of surgery in U.S. hospitals.
"All our patients actually pay out of pocket -- that is the main reason they come to us seeking care," said Patrick Marsick of MedRetreats, one of the oldest medical travel companies in the United States, offering the services of 11 hospitals in seven countries including Argentina and Thailand.
Cosmetic surgery is still the largest share of their business, but the company offers 183 different procedures, and the number of patients who travel for serious medical procedures is increasing, Marsick told United Press International. He estimated MedRetreats will arrange medical travel for 5,200 clients next year.
Many of the patients have cancer and other life-threatening illnesses and would not be able to afford treatment in the United States, he said.
"People can mortgage their house or take out a home equity loan and afford a $10,000 surgery in another country," he said, "but not $100,000 for a surgery here.
"These people are just elated they have an option," Marsick added.
MedRetreats arranges procedures for patients, including inspecting hospitals, digitizing their medical records and providing staff to help patients navigate the foreign destinations.
The company does not charge patients directly, but turns a profit by keeping 15 percent of the 20-percent discount they demand from foreign partners.
Trade in healthcare is already having an economic impact. In 2003 more than 350,000 patients traveled to Cuba, India, Jordan and Southeast Asia to seek care. The government of India has embarked on a marketing campaign to increase health travel, and other countries in the Americas and the Caribbean are working to position themselves as premiere health-tourism destinations.
The number of foreign hospitals seeking international accreditation -- an important step in luring safety-conscious foreign patients -- is accelerating, Maureen Potter, executive director of the Joint Commission on Accreditation of Healthcare Organizations, the largest international hospital certification body, told UPI.
In order to receive accreditation, hospitals must undergo site inspections and hand over performance statistics for scrutiny.
"Accreditation is an important way for hospitals to distinguish themselves," Potter said. "Healthcare is a risky business and it does help when an organization has committed itself to external evaluation."
The commission has certified 81 hospitals since it began its international hospital accreditation program in 1999.
Freer trade in healthcare could benefit both countries involved in the exchange, Aaditya Mattoo, a World Bank economist who studies services trade, told UPI.
If one in 10 patients who needs one of 15 highly tradable, low-risk treatments went abroad, the annual savings for the United States would be $1.5 billion, according to a study Mattoo co-authored in the March/April volume of the journal Health Affairs.
The savings on an individual level could also be large. Knee replacement -- a surgery performed 400,000 times a year in the United States -- costs about $10,000 domestically but is less than $2,000 in top-notch facilities in Hungary and China. Even after adding in $1,000 in travel expenses, medical travelers still see substantial savings, according to an example in the article.
In destination countries, foreign patients mean an influx of cash, but also, and perhaps more importantly, a way to mitigate chronic brain drain among health professionals. Some of the countries most in need of doctors see a high proportion of them leave each year for better-paying jobs in better conditions in developed countries.
About one-quarter of doctors in the United States, the United Kingdom, Canada and Australia are foreign-born, and as many as 75 percent of them are from low-income countries.
More than 10 percent of India's doctors end up overseas, and nine of the 20 countries that export the most doctors are those in sub-Saharan Africa and the Caribbean -- this despite the fact that there is a chronic shortage of doctors in the developing world. In Kenya, for example, there is one doctor for every 10,000 people.
First-class, export-oriented hospitals with higher wages in developing countries could help address the problem, Mattoo said. "If you could ensure more business for people in their home countries, you would dilute the incentive to emigrate."
Although many people are already taking advantage of the healthcare trade's potential, changes in health insurance are needed for really substantial growth, he said.
Medicare and Medicaid currently explicitly forbid reimbursement for procedures performed abroad, and most private insurance plans cover emergency surgery for people who become sick while traveling but do not pay for scheduled overseas procedures.
While some conversations are taking place in the insurance industry, there has been little action so far, perhaps because insurers don't want to frighten consumers with the specter of grandpa being forced to have his coronary bypass in Thailand instead of the neighborhood hospital.
But if insurance companies did enact policies of covering the actual cost of seeking care overseas -- treatment plus travel -- there could be a large expansion in healthcare trade, Mattoo said.
"All you need to do is end the current discrimination. That would mean insurance would cover treatment regardless of where you receive it," he said. "When people have the choice, they will exercise their choice in greater numbers."
Like any expansion of free trade, however, healthcare trade would create winners and losers. Pressure from foreign competition could lower the wages of doctors in the United States.
Moreover, an influx of foreign patients has already to some extent led to a phenomenon called "crowding out," whereby prices go up for consumers in the destination country as demand for doctors there increases. For example, healthcare prices in some parts of India have already gone up for this reason, making it even harder for the poor to afford treatment.
But if proper safeguards are put in place, Mattoo said, those problems could be minimized.
Many patients will still find it necessary to seek care in their home country either because they cannot travel or because of the complexity of a particular procedure.
And of course, the health-tourism trend is a two-way street, with a parallel phenomenon already occurring to some extent: Upper-class customers from developing countries traveling to Europe and the United States for cutting-edge procedures not available elsewhere.
Mattoo noted that enlightened policies in developing countries are essential to harness the additional gains from healthcare trade to expand access to healthcare in those counties, Mattoo said.
"In some ways, healthcare is like any other good. If you start exporting more rice, the price of rice in your country goes up," Mattoo said.
"With more revenue, there's a growing possibility of cross-subsidization of care for the poor, but you have to have policies to ensure the benefits trickle down to the poor," he said.
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